If there is one thing that is in abundance on Wall Street, it is opinions. I suppose this is a good thing because all of these differing viewpoints converge to form a market-clearing price which is the quoted price of a given stock or index. However, there is one animal that is not only bad for your portfolio, but terribly annoying as well. Say hello to the “permabear.”
Ursine Grouchiness
First of all, let’s define exactly what a permabear is. As suggested by it’s name, a permabear is somebody who is literally bearish 100% of the time regardless of the circumstances or economic backdrop. They go to sleep every night and wake up every morning thinking of doom and gloom and how the market is on the verge of a big crash.
Here is the problem I have with these grouchy creatures. Being bearish is certainly not a bad thing and certain instances call for being negative. However, permabears take this to a whole new level, which completely clouds their judgment and prevents them from seeing great opportunities that unfold everyday. Even in the worst bear markets, there are ample chances to profit from the long side.
Another problem I have with them is that they are incredibly annoying. It’s impossible to have an objective conversation with them and you come away from the talk wanting to hang yourself due to depression. They tend to be extremely dogmatic and are always armed with fixed talking points intended to evangelize the rest of the world to their viewpoints. Any move contrary to their opinion is met with derision and scorn.
Skepticism Is Not The Same
Being a skeptical investor is not the same thing as being a permabear. One of my favorite managers, Doug Kass, is usually skeptical, but brings great insight into the market. I would characterize him more as a contrarian investor rather than perpetually bearish. This allowed him to nail the bottom in March 2009 as everybody was running for the hills. A permabear would have said the Dow was going to 1000 or below.
To sum up, it sometimes pays to be bearish, but it’s important to always be flexible. There are always money-making opportunities on both sides and you have to be open-minded to see them. Also, I’d you want to preserve your sanity at a cocktail party, avoid talking to a permabear at all costs.
Permabears Have It All Wrong is an article from: 
